FTAPCCI organizes panel discussion on ‘The Insolvency and Bankruptcy Code 2016’

Hyderabad, June 18 (KNN) With an objective to critically analyze and identify discrepancies in “The Insolvency and Bankruptcy Code 2016”, the Federation of Telangana and Andhra Pradesh Chambers of Commerce & Industry (FTAPCCI) organized a panel discussion in Hyderabad.

The panel suggested to empower the adjudicating authority to finally determine whether the dispute is bonafide or not and to say that such a determination is a question of fact and hence not appealable.

It further said as in the case of an operational creditor, a financial creditor’s application should not be admitted unless there is a determination by the adjudicating authority that the financial debt is subject to a bonafide dispute.

“It must be very clearly laid down in the Code that management of corporate debtor shall get displaced only if significant amount say 20 – 25 per cent of the debt of the corporate debtor remains due and unpaid.”, panel said.

The Indian industry and the economy are suffering with the problem of huge pile of bad debts. The total Non-Performing Assets (NPAs) is around 4 Lakh Crore and a huge amount of restructured loans also. Thus the total stressed assets (Bad Debts) amount to 11% of the total lending. As a percentage of total loans, the bad loans grew from 3.49% (2013) to 8.3% (2015). Corporate bad loans constitute 56% of the total bad loans of state-run banks.

The government has brought in this Code, largely modeled on the U.S. Bankruptcy Law, with the good intention of facilitating timely resolution of corporate bankruptcy. However, unless necessary changes are made to it, the legislative intent would largely remain unfulfilled. (KNN Bureau)